 I'm Tim Freundlich and I am the CEO of Impact Assets which is a donor advice fund which I'll talk a little bit about as we go through this but we're gonna spend just 20 minutes of your 19 minutes and 38 seconds of your time asking us the question about like what if we could move this whole industry to much deeper impact and and and what's all the critique about it right now on donor advice funds as people may or may not know there's about a hundred I've done the math and like look back you know last survey was about a hundred and ten billion in assets in donor advice funds across half a million accounts that are supposed to be all about you know creating better environmental and social outcomes in the world we've given them a big tax break I know you're gonna have some thoughts about this cat to my left but or you're right and all in all it's like what why is this sitting is this some is this money you go sitting in a mattress how do we move it now you know we're gonna be pushing about 150 billion probably by the end of this year by my you know kind of like prognostication close to 600,000 accounts and the vast majority of it is kind of you know sitting around so we're gonna talk a little bit about kind of probing and provoking on this idea of what if we could catalyze a lot more changeable well you'll see that kind of narrative arc of this but why don't you kind of give us your your thoughts cat sure well so first they said to have some fun so good morning so cap friends here's your friendly banker I have news to pass on to everybody what I'm about to say could mean the world's disaster could change the joy and laughter from tears and pain it's that love's in need of love today don't delay send yours in right away hate's gone round breaking many hearts stop before it's gone too far oh I have to use notes for not only singing but talking so excuse me if I look down but donor advice funds hardly anybody in the outside world knows what they are in full confession my husband Tom Steyer and I have used them for years when used in best practice they can do enormous good they can endow research for years they can be spent rapidly down to well worthy nonprofits to sort of attack the problems of our day but they do raise some issues when they're not in best practice and I'm going to go through those really quick in spite of many good actors and that they are the dominant business model of the community foundations which are place-based organizations expert in their fields using donor advised funds that are they that are hosted there to do the important investing that they're doing they compete with the commercial entities for these funds and while it is their dominant business model in my humble opinion their lunch is being eaten by some of the commercials because of the assets under management imperative of the commercial entities the fidelity charitable trust is now the largest nonprofit in the country it is not unusual for donor advised fund fees to be very low in these big investment houses because they know that they're going to drag with them all sorts of other assets under management and while they're there they're largely conventionally invested in the very things that we're trying to solve with government and philanthropy things like fossil fuel and climate change private prisons payday lending and when they go into these donor advised funds it's not free they are diverting otherwise very critical government resources called tax proceeds away from government which is in theory our only real accountable organization in the mix of buy and for the people taking those funds away from public school climate mitigation you name it and they do it at a rapid rate the average estimate of how much the government loses is 74 cents and how much tax that the donor pays is 26 cents so we have to if we're going to give this kind of tax treatment we have to worry that it's doing good for us the other problem with donor advised funds can be that they are an extension and expansion of the concentration of power in society so a lot of donor advised funds are used to make large grants to private hospitals public university excuse me private universities so on and you can bet that you have a lot more pull at those institutions when you and your family need to access them there is no reporting or transparency or very little especially at the fund level and it's actually a form of shirking our public duties I would say we wouldn't dream of ordinary taxpayers skipping out on their taxes why do we give such a benefit to private philanthropists who tend to be in the highest socioeconomic brackets so we're actually supporting a two-year bill that assemblywoman Buffy wicks is carrying the first year to get reporting in transparency so we can understand the flow of this capital what it's doing what it's not doing how fast it gets dispersed out of these funds whether it's actually going to other nonprofits or public purpose or if it's just going into another donor advice fund the worst possibility is that it's going into political spend especially in hate groups we just need a lot more information about where it's going I'm going to close up this part with just saying I'm very excited to join a community of best practice at East Bay Community Foundation donor advice fund holders who are willing to train on their own privilege disperse funds as rapidly as possible either through investment or grant making to organizations led by people of color and women avoiding aligning their investment portfolio away from pernicious activities and in favor of good ones and spending them down as rapidly as possible so we hope to gather a lot more donors into those kinds of vehicles and I mean I as a prep yes I mean I run a donor advice fund with about 1,300 donors and 1.1 billion dollars it's kind of the largest pure play impact investing oriented donor advice fund in the country and although I feel like we've organized ourselves around some principles that are really good practices and we're moving in that direction I don't disagree with much of anything that you said even though I feel a little you know it makes me a little antsy right because it's the government getting involved in our in our social entrepreneurship is scary from a regulatory standpoint because I don't believe they know what they're doing and a lot of unintended consequences can be built into stuff in last minute you know bickering in the hallways to get things through but I will say that I think that we need to get serious there's there's a big social contract to do at a national level and whether it's just lead actors like impact assets or we create a coalition and and really push people to sign on to some principles and the stuff that that's on our mind is I mean these these assets should be first fast and furious they should be furious at the injustice environmental and economically in the world they should be willing to move early and often to the craziest stuff at the deep end of the pool I mean it's all supposed to go to charity as grant making like why shouldn't our whole endowment be activated to do this and that's what we're trying to do we're doing three deals a week in private equity all in the impact space including revenue rights to nonprofits and first time fund managers and this and that and the other thing but that's not the practice nationally so I can't really rebut the the critique on some level but I mean I'll say that you know this that enablement that commitment needs to be baked in the that the commitment to no harm and discrimination in our grant making needs to be baked into your your you know the southern poverty law center list you know that that example that you gave that we have to actually engage and educate and inspire the donor base we can't just let them be passive do whatever they want I think we need to commit to those things along with transparency and inclusivity and and and commitments to diversity in that in our stakeholder system and how we represented if we do all of that and commit to some baseline best practice around payout and think I mean we give away 13 14 percent a year I mean way more than private foundations but it's true some of our accounts maybe not so much but anyway I just want like that's kind of how I process what you're saying and I do I feel pretty agitated that we need to take get get a coalition going on that's willing to take leadership nationally and that we are leaving a lot of stuff unplumbed but Christy I want to pass it over to you for four or five minutes um four minutes that uh just to uh to talk about because I think you epitomize like when I dream of what impact uh what investing and and philanthropy can be when it's joined together in a donor advice on comp you're like you're the light so you tell us what it looks like when it's good I'll channel the lights um I find a lot of political activism so I believe deeply that we sort of need the critique coupled with the modeling of the future we want to exist in the world so that is really what we're trying to do at new media ventures um for those of you that don't know nmv is a fund and a network of angel investors and donors and we are supporting entrepreneurs and activists wrestling with the biggest challenges facing our democracy um when we were first getting started I was working with a small group of angel investors and essentially we were doing deals as one-offs trying to figure out the political impact investing space and what that looked like and quickly we realized I needed to be able to advise a fund I needed to be able to write the checks we were considering a number of different options including a fairly standard fund that would have a 10 year life um simultaneously we were getting lots of questions from foundations that were saying we're on this impact investing journey everybody keeps telling us we should call you we really want to align our grant making with our investing and pretty quickly we realized that a donor advised model could really help us do a number of things that we were trying to do and this is about five years ago that we started this particular fund and new media ventures has been around for about uh 10 years so one we were trying to democratize access to capital so we fund in the civic tech and media space and typically the way deals get done is that like they're just uh passed along very insular groups of people and we really wanted to make sure that if we're actually going to try to save democracy we're including everybody in that the second is that we really wanted to be incentivized to take risk and what the DAF model allows us to do is actually take those big risks that tim was talking about this sort of like first fast and furious uh investing and grant making uh the third thing um which was very specific to our space but I think is relevant to people in other sectors is that we were really trying to bring together individual donors and investors and institutional funders so west coast and east coast philanthropy is really different in the civic engagement space it's very different in the media space and by pooling capital together we could bring people that might not otherwise have conversations but we're actually doing very much of the same thing kind of in different ways so what that has resulted in is the nmv innovation fund we try to publish as much as possible about what we have learned from this structure from the process and so that is part of what deep engagement looks like so we deeply engage with the donors to the fund although we are advising and making recommendations to impact assets um our our fund I don't know if I said is housed at impact assets I should say um and believe that that is like part of our service to the field beyond actually the grants and investments we make the second thing is collective action so we are not just making these grants and investments from our fund but there is a whole network of donors and investors that fund alongside us and that is what amplifies the capital that we're moving to the field um we fully deploy our money so we are doing that we were raising money every year we're deploying it every year and that is part of the modeling I think we can do for the field is that that is possible and you can do it quickly um there is actually enough deal flow if you create a structure to bring it to you um and then the last thing is kind of around that point of like doing what you said we were what you said you were going to do like there's so many folks that are making investments that aren't aligned at all with their program areas and the DAF really allows us to align our grant making and our investments which also means that when there are exits that might money cycles back into the fund and people that are working on non-profit projects also benefit from the success of the for-profit exits in the space which feels um again both like a way to align um align our impact but also serves as a sort of leveling function in the field that we operate in so how does that make you feel I'm I'm all in favor of encouraging the best behavior out of the donor advice funds I think we need to take a look at private philanthropy in general because it's um a lot of it is based on a perpetuity model that these are institutions that are supposed to last centuries and we have a species that may not last 10 years so it seems a little mismatched to me I think the urgency is here for us to find um regulatory and cultural reasons to accelerate philanthropy right now yeah yeah I mean we were talking at a board meeting on uh yesterday here about like sort of how we are wrestling with these with the principles that we want to have to drive our our work and urgency is on the list like it and I think it's for just what you said like we need to get impatient and and and we also have to be willing to lead beyond our business I mean I think it's really important and maybe that's because we're a non-profit social enterprise as opposed to a for-profit or I don't know but like you really need to invest in the system that you are a part of and an actor and you can't just say like I'll just I'll just act well and and so I think and you know it's just yeah that teed off that that that was kind of um also really much on my mind but and just to be clear I think that impact assets is one of the leaders and uh new venture new media ventures are modeling the right behavior for this I'm just saying we've got to recognize the other elephant in the room which is uh the lion's share of those assets are not necessarily aligned in public purpose right now there's like two billion in impact investing or program related investing at most across the whole space and we're half of it and it goes back to what you said originally right like most people that are outside of this room have no idea what we're talking about so the sort of critique that people like cat are making is actually really really important for other people that are moving money that have anything to do with money actually here and then there's room for what tim is doing what new media ventures is doing to model okay not just the critique but like here's a different way to do it that actually also works so what's the one what's the one thing that you would recommend that that the industry do I mean if you could boil it down is it all baked into this bill that you're you're thinking about in the legislature but like what's the what's the the real punchline I think the transparency has to increase before we know what actually we should do but um the last gentleman was just talking about opportunity zones and I'll just suggest a specter of possibility which is if the state of California decides to give conformity to opportunity zone investments in uh which means that long-term capital gains if invested for 10 years would be totally tax-free on the corpus and the earnings over that 10-year period if we get allowed the state tax to be exempt as well or not applied as well that starts to create an attractive alternative to donor advised funds where you actually get to keep the money if the state uses that tool to make sure it has public purpose because the oz's lack guardrails like it can is only say conforming is only eligible for low-income affordable housing then we have an interesting competitive landscape for private philanthropy to compete against do you have any last words for us christie um my last words are two things one you don't have to do this alone it's like why people like nmv exist is like we're pooling together money from different people so that people can learn together and also it is like not that hard to just do that's uh very much at the heart of new media ventures was we did not know if this specific model would work in our investment area but um by sort of having an entrepreneurial experimental mindset and approach we have like gotten to the point where this has been an incredibly effective and impactful vehicle for us and i think my last thought is um thanks for asking is um is i really i think that we can um i think we can really actually use the the the critique and this moment over the next couple of years and maybe the regulatory pushes either at the state or or the fed level because there's there's some action there too uh to get out ahead of this and be and be like lean forwards into it and and by baking in impact investment and uh into some of the the conversation and actually make that a a carrot uh and a way to meet our contract with society as as sponsors and and philanthropists of don't know about in don't advise funds i think we can uh actually turn this to uh which makes me feel excited about regulation as opposed to like a little freaked out about it uh as a as a practitioner so you know i i think we we bring the program related investment impact investment like really affirmatively into the conversation and if there's going to be regulation i think we need to make sure that the whether it's reporting or it's actually requirements like let's get that in there so that it drives um adoption and innovation broadly and then maybe the foundations will learn something from us too so i want to thank you all we're at time uh thanks for your attention though and thank you thank you guys